Correlation Between TBS Energi and Central Omega
Can any of the company-specific risk be diversified away by investing in both TBS Energi and Central Omega at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining TBS Energi and Central Omega into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between TBS Energi Utama and Central Omega Resources, you can compare the effects of market volatilities on TBS Energi and Central Omega and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in TBS Energi with a short position of Central Omega. Check out your portfolio center. Please also check ongoing floating volatility patterns of TBS Energi and Central Omega.
Diversification Opportunities for TBS Energi and Central Omega
0.02 | Correlation Coefficient |
Significant diversification
The 3 months correlation between TBS and Central is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding TBS Energi Utama and Central Omega Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Central Omega Resources and TBS Energi is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on TBS Energi Utama are associated (or correlated) with Central Omega. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Central Omega Resources has no effect on the direction of TBS Energi i.e., TBS Energi and Central Omega go up and down completely randomly.
Pair Corralation between TBS Energi and Central Omega
Assuming the 90 days trading horizon TBS Energi Utama is expected to under-perform the Central Omega. But the stock apears to be less risky and, when comparing its historical volatility, TBS Energi Utama is 1.99 times less risky than Central Omega. The stock trades about -0.22 of its potential returns per unit of risk. The Central Omega Resources is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest 15,700 in Central Omega Resources on August 27, 2024 and sell it today you would earn a total of 5,700 from holding Central Omega Resources or generate 36.31% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
TBS Energi Utama vs. Central Omega Resources
Performance |
| Timeline |
| TBS Energi Utama |
| Central Omega Resources |
TBS Energi and Central Omega Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with TBS Energi and Central Omega
The main advantage of trading using opposite TBS Energi and Central Omega positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if TBS Energi position performs unexpectedly, Central Omega can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Central Omega will offset losses from the drop in Central Omega's long position.| TBS Energi vs. Petrosea Tbk | TBS Energi vs. Harum Energy Tbk | TBS Energi vs. Perdana Karya Perkasa | TBS Energi vs. Samindo Resources Tbk |
| Central Omega vs. Kedaung Indah Can | Central Omega vs. Langgeng Makmur Industri | Central Omega vs. Kabelindo Murni Tbk | Central Omega vs. Mustika Ratu Tbk |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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